Despite its prolonged political crisis, Thailand has advanced six places to 31st position thanks mainly to the improvement in its macroeconomic environment, according to the World Economic Forum’s “Global Competitiveness Report 2014-2015”.

However, the country needs to address considerable challenges if it is to maintain competitiveness as other countries, including those in Asean and elsewhere in Asia, are moving up the ladder in the report’s Global Competitiveness Index (GCI).

In recent years, the Kingdom had gradually moved up from 39th place in 2011-2012, to 38th in 2012-2013, and 37th in 2013-2014.

Improvement this year is seen mainly in the WEF’s macroeconomic environment pillar, one of 12 that range from infrastructure, health and primary education, institutions, goods market efficiency and labour market efficiency, to business sophistication and innovation.

Thailand’s macroeconomic pillar moved up 12 places in the year to 19th, making it the country’s best showing among the 12 pillars.

In 2013, the government almost balanced its budget and reduced inflation to 2 per cent. Public debt remained stable and the savings rate was high, the WEF said in its latest report.

Thailand continues to do well in financial development (34th) and improves its already strong showing in the market efficiency pillar (30th place, up four).

However, market competition remains limited by a number of barriers to entry, especially those affecting foreign investments, the report noted.

The report added that considerable challenges remain in other areas: First and foremost these relate to governance.

“Political and policy instability, excessive red tape, pervasive corruption, security concerns, and high uncertainty around property-rights protection seriously undermine the institutional framework … [93rd in the public institutions sub-pillar, down eight places]. In most of these areas, Thailand ranks below the 100 mark.

“In particular, the level of trust in politicians is among the lowest in the world [129th]. Another concern is the mediocre quality of education at all levels [87th, down nine].” and the still-low level of technological readiness pillar [65th], although Thailand shows marked improvement in this area [up 13 places]. It must be noted that all the data used in our assessment were collected before the most recent developments – including the military coup of May 2014 – took place,” it said.

Elsewhere in Asean, the other four countries that are grouped as Asean 5 – Indonesia, the Philippines, Malaysia and Vietnam – also witnessed improvement in the rankings.

Malaysia makes its way into the top 20 for the first time since the current GCI methodology was introduced in 2006. The country remains the highest-ranked among the developing Asian economies.

In a region plagued by corruption and red tape, Malaysia stands out as one of the very few countries that have been relatively successful at tackling these two issues, as part of its economic and government transformation programmes, said the WEF report.

Indonesia moved up four notches to 34th, with improvement in the overall ranking, which could help sustain the country’s impressive momentum – its gross domestic product has grown by 5.8 per cent annually since 2004 – under its new leadership, said the report.

That said, Indonesia’s overall performance remains uneven. Infrastructure and connectivity continue to improve: Up five places from last year and 20 places since 2011, Indonesia now ranks 56th in the related GCI pillar.

The quality of public and private governance is strengthening: Indonesia is up 14 places to 53rd as a result of improvement in 18 of the 21 indicators composing this pillar. In particular, the country ranks 36th for government efficiency.

Corruption remains prevalent (87th), but has been receding for several years.

Up seven places this year to 52nd, the Philippines’ gain of 33 places since 2010 is the largest over that period among all countries studied.

The results suggest that the reforms of the past four years have bolstered the country’s economic fundamentals. The trends across most of the 12 pillars are positive, and in some cases truly remarkable, said the report.

In the institutions pillar (67th), the Philippines has leapfrogged some 50 places since 2010. In particular, there are signs that the efforts made against corruption have started bearing fruit: In terms of ethics and corruption, the country has moved from 135th in 2010 to 81st this year.

The country is one of the best digitally connected developing Asian nations, close behind Malaysia (60th) and Thailand (65th).

Up two positions, Vietnam ranks 68th overall, with a performance almost unchanged from last year.

After an episode of double-digit inflation in 2011, its macroeconomic situation continues to improve (75th, up 12 positions), as inflation declined to 6.6 per cent.

Public institutions also receive a better assessment (85th, up five), on the basis of better property-rights protection (104th, up nine), improved efficiency (91st, up 13), and a lower level of perceived corruption (109th, up seven).

Holding second place for four consecutive years, Singapore is the only Asean nation in the top 10. It is praised for outstanding and stable performance across all dimensions of the GCI.

Again this year, Singapore is the only economy to feature in the top three in seven of the 12 pillars; it also appears in the top 10 of two other pillars.

Singapore tops the goods-market-efficiency pillar and places second in labour-market efficiency and financial-market development. Furthermore, the city-state boasts one of the world’s best institutional frameworks (third), even though it loses the top spot to New Zealand in that category of the index.

Singapore possesses world-class infrastructure (second), with excellent roads, ports, and air transport facilities. Singapore’s competitiveness is further enhanced by its strong focus on education, which has translated into a steady improvement of its ranking in the higher education and training pillar, where it comes in second, behind Finland.

Singapore’s private sector is also fairly sophisticated (19th) and becoming more innovative (ninth), although room for improvement exists in both areas, especially as these are the keys to future prosperity, according to the WEF.

Elsewhere in the world, Switzerland remains the most competitive economy, followed by Singapore, the United States, Finland, Germany, Japan, Hong Kong, the Netherlands, the United Kingdom and Sweden.

Source : The Nation | September 4, 2014

Thomas D’Innocenzi

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